New drug-purchasing plan could cut hassles

Washington -- Doctors soon will be able to get their Medicare Part B drugs in a way that could prove less burdensome than the current system.

The Centers for Medicare & Medicaid Services has released a proposed rule on the competitive acquisition program, a process that will allow physicians to obtain many cancer drugs and other office-administered medications from one of several vendors selected by the government. Under the voluntary program, set to begin next year, participating practices no longer will be required to pay for these drugs upfront and seek subsequent reimbursement from Medicare and patients.

Instead, oncologists and other physicians would order all of their needed drugs within the eligible categories from one of five lowest bidders competing for Medicare's business in their region of the country. The drug vendors will be responsible for billing Medicare for the costs of the medications and the patients for any coinsurance or deductibles that apply.

Oncologists, who will be particularly affected by the new program, are still reviewing the proposal to see if it provides a viable alternative, said Joseph Bailes, MD, a Houston oncologist and co-chair of the American Society of Clinical Oncology's government relations committee. Although ASCO is surveying members to see what changes regulators should make in the final rule, the program's voluntary nature means that individual practices will need to make their own assessments of whether to participate.

CMS anticipates that the competitive bidding process will save money for the federal government and Medicare beneficiaries. But success hinges on attracting enough doctors to the program with the promise of reducing current hassles. Some doctors have complained that the need to find lower prices on the open market and to seek a portion of the reimbursements from their patients drains time and resources away from their practices.

"This proposed competitive acquisition program offers physicians an option that could save them time and paperwork, while creating a competitive environment for the acquisition of Part B drugs," said CMS Administrator Mark McClellan, MD, PhD. At least 15 drug vendors have said they are interested in competing for contracts throughout the country.

Physicians will continue to bill Medicare directly for the costs of actually administering the medications. Under the proposed rule, vendors will not be able to receive full payment for the prescribed drugs until the doctors submit their administration claims.

Possible tradeoff

The program might not be appropriate for every practice if certain provisions in the proposed rule are preserved in the final product.

For instance, to ensure appropriate payments for drugs, vendors will generate a separate prescription number for each shipment. The receiving doctor must record and subsequently report those numbers to Medicare when filing for reimbursement for administering the medication.

"That's not common in practices now, and that's something that may make the program less attractive to practices," Dr. Bailes said. Doctors will need to decide whether new paperwork requirements are less onerous than the ones they are giving up.

Doctors who participate also give up any chance to capture federal payments for Medicare Part B drugs that exceed the actual purchase costs of the medications.

Medicare traditionally has reimbursed oncologists and other doctors more for the drugs than the physicians pay for them, though this overage has been scaled down significantly. Any added money on the drug cost side is used to offset underpayments on the drug administration side.

Practices will need to determine if the added benefit of offloading the work required to navigate the current system is enough to forgo the added federal funds that doctors might receive after paying for the drugs on the open market. Medicare currently reimburses for drug purchases at 106% of the average sales price offered by manufacturers. Participating in the new program will not affect the size of the drug administration reimbursements that physicians receive.

The recent changes to the drug payment formula reduce the chances that physicians remaining in the current system can expect significant positive margins on the drug purchase side of the equation, Dr. Bailes said. Larger practices that administer a significant volume of drugs, however, could face a more complicated financial decision when they have the opportunity to sign up for the new program during the fall enrollment period.

If a physician practice decides to participate, it will not be able to leave the program or pick another vendor until the next year. Physicians can be barred from the program if they fail to submit the necessary drug administration claims on a timely basis.

CMS is seeking public comments on the proposed rule until April 26. The agency is asking for physician input on such questions as whether to phase in the program for certain specialties or drugs and how many competitive regions to establish.